8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 29, 2007

CRANE CO.

(Exact name of registrant as specified in its charter)

DELAWARE

(State or other jurisdiction of incorporation)

1-1657	13-1952290
(Commission File Number)	(IRS Employer Identification No.)
100 First Stamford Place, Stamford, CT	06902
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (203) 363-7300

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THIS REPORT

Section 2 – FINANCIAL INFORMATION

Item 2.02 Results of Operations and Financial Condition.

On January 29, 2007, Crane Co. announced its results of operations for the quarter ended December 31, 2006. Copies of the related press release and quarterly financial data supplement are being furnished as Exhibits 99.1 and 99.2 to this Form 8-K.

The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

SECTION 8 – OTHER EVENTS

ITEM 8.01 Other Events

The following information is provided in order to update the discussion in the Company’s previously filed reports with respect to its asbestos liability.

Information Regarding Claims and Costs in the Tort System

As of December 31, 2006, the Company was a defendant in cases filed in various state and federal courts alleging injury or death as a result of exposure to asbestos. Activity related to asbestos claims during the periods indicated was as follows:

(In millions)	Year Ended December 31,
	2006		2005		2004
Beginning claims	89,017		84,977		68,606
New claims	4,853		7,986		18,932
Settlements	(1,043	)	(1,829	)	(1,038	)
Dismissals	(6,886	)	(2,117	)	(1,523	)
Ending claims*	85,941		89,017		84,977

* Does not include 36,246 maritime actions that were filed in the United States District Court for the Northern District of Ohio and transferred to the Eastern District of Pennsylvania pursuant to an order by the Federal Judicial Panel on Multi-District Litigation (“MDL”). These claims have been placed on the inactive docket of cases that are administratively dismissed without prejudice in the MDL.

Of the 85,941 pending claims as of December 31, 2006, approximately 25,000 claims were pending in New York, approximately 28,000 claims were pending in Mississippi, approximately 9,000 claims were pending in Texas and approximately 4,000 claims were pending in Ohio, all jurisdictions in which legislation or judicial orders restrict the types of claims that can proceed to trial on the merits.

Since the termination of the comprehensive master settlement agreement (“MSA”) on January 24, 2005, the Company has been resolving claims filed against it in the tort system. The Company has not re-engaged in discussions with representatives of current or future asbestos claimants with respect to such a comprehensive settlement. While the Company believes that federal legislation to establish a trust fund to compensate asbestos claimants is the most appropriate solution to the asbestos litigation problem, there is substantial uncertainty regarding whether this will occur and, if so, when and on what terms. The Company remains committed to exploring all feasible alternatives available to resolve its asbestos liability in a manner consistent with the best interests of the Company’s shareholders.

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Substantially all of the claims the Company resolves are concluded through settlements. The Company recently tried the Joseph Norris asbestos claim (the “Norris Claim”) to verdict in California, however, and received an adverse jury verdict on September 15, 2006. On October 10, 2006 the court entered judgment on this verdict against the Company in the amount of $2.15 million, together with interest thereon at the rate of 10% per annum until paid. The Company does not believe that the verdict was supported by the evidence. In addition, the Company believes that procedural irregularities prevented an appropriate determination of the Company’s alleged responsibility for plaintiffs’ injuries. The Company’s post-trial motions were denied by order dated December 15, 2006. On January 3, 2007, the Company appealed the judgment; the appeal is pending.

The gross settlement and defense costs incurred (before insurance and tax effects) for the Company in the years ended December 31, 2006, 2005 and 2004 totaled $69.1 million, $45.1 million and $40.9 million, respectively. In contrast to the recognition of settlement and defense costs that reflect the current level of activity in the tort system, cash payments and receipts generally lag the tort system activity by several months or more. Cash payments of settlement amounts are not made until all releases and other required documentation are received by the Company, and payments of both settlement amounts and defense costs by insurers are subject to delays due to the transition from the Company’s primary insurers to its excess insurers. The Company’s total pre-tax cash payments for settlement and defense costs, net of payments from insurers and including certain legal fees and expenses relating to the terminated MSA in the years ended December 31, 2006, 2005 and 2004 totaled $40.6 million, $45.3 million and $28.1 million, respectively. Detailed below are the comparable amounts for the periods indicated.

								Cumulative to Date through Dec. 31, 2006
(In millions)	Year Ended December 31,
	2006		2005			2004
Settlement costs incurred (1)	$	26.3	$	17.4		$	17.2	$	82.5
Defense costs incurred (1)		42.8		27.7			23.7		116.5
Total costs incurred	$	69.1	$	45.1		$	40.9	$	199.0
Pre-tax cash payments (receipts) (2)	$	40.6	$	45.3		$	28.1	$	125.6
(Refund) associated with terminated MSA			$	(9.9	)	$	10.0	$	0.1

(1) Before insurance recoveries and tax effects.

(2) Net of payments received from insurers. Amounts include certain legal fees and expenses related to the terminated MSA.

The amounts shown for settlement and defense costs incurred, and cash payments, are not necessarily indicative of future period amounts, which may be higher or lower than those reported.

In 2005, the Company did not receive significant reimbursements from insurers as the Company’s cost sharing agreement with primary insurers was essentially exhausted. The Company has negotiated coverage-in-place and other agreements with several of its excess insurers whose policies provide substantial insurance coverage for asbestos liabilities. Reimbursements from such insurers for past and ongoing settlement and defense costs allocable to their policies have been made as coverage-in-place and other agreements are reached with such insurers.

On July 22, 2005, the Company entered into an agreement to settle its insurance coverage claims for asbestos and other liabilities against certain underwriters at Lloyd’s of London reinsured by Equitas Limited (“Equitas”) for a total payment of $33 million. Under the agreement, $1.5 million was paid to the Company in the third quarter of 2005. The balance was placed into escrow for the payment of future asbestos claims and funds remaining in escrow were paid to the Company on January 4, 2007. The Company’s settlement with Equitas resolves all its claims against pre-1993 policies issued to the Company by certain underwriters at Lloyd’s of London and reinsured by Equitas.

Effective March 1, 2006, the Company entered into two agreements with Hartford Accident and Indemnity Company and certain affiliated companies (“Hartford”) settling all outstanding claims under the Company’s primary policies with Hartford for a final payment of $1.3 million and establishing a coverage-in-place arrangement for asbestos claims under the Company’s excess policies with Hartford, including a payment of $2.6 million for claims billed to Hartford through September 1, 2005. The Company received these payments in March 2006 and April 2006, respectively. The agreements with Hartford also include provisions for mutual releases, indemnification of Hartford and claims handling procedures.

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Effective April 10, 2006, the Company and Everest Reinsurance Company and Mt. McKinley Insurance Company (collectively, “Everest”) reached a settlement agreement pursuant to which, among other things, Everest’s insurance coverage obligations for asbestos claims under the three historical Everest policies issued to Crane Co. were released. A $3.8 million cash payment under this settlement agreement was received by the Company on April 21, 2006.

On June 30, 2006, the Company and Fireman’s Fund Insurance Company (“Fireman’s Fund”) entered into an agreement, effective July 3, 2006, establishing a coverage-in-place arrangement for asbestos claims under the Company’s excess policies with Fireman’s Fund, including a payment of $2.3 million for claims billed to Fireman’s Fund through June 26, 2006, which was received by the Company in August 2006. The agreement with Fireman’s Fund also includes provisions for mutual releases, indemnification of Fireman’s Fund and claims handling procedures.

Effective September 7, 2006, the Company entered into a coverage-in-place agreement with Sentry Insurance (“Sentry”), regarding an excess policy issued by Sentry’s predecessor, Dairyland Insurance Company.

Effective December 20, 2006, the Company entered into a coverage-in-place agreement with Employers Insurance of Wausau (and Nationwide Indemnity Company in its capacity as claims administrator for Wausau) (“Wausau”), establishing an arrangement for asbestos claims under the Company’s excess policies with Wausau, and providing for initial payments totaling $2.6 million for claims billed to Wausau through November 30, 2006. Crane Co. has received $1.5 million of such amount, with the balance to be paid in February 2007. This agreement includes provisions for mutual releases, indemnification of Wausau and claims handling procedures.

Effective December 22, 2006, the Company and Century Indemnity Company and ACE Property and Casualty Company (collectively “ACE”) entered into an agreement which, among other things, established a coverage-in-place arrangement for asbestos claims under the Company’s excess policies with ACE. This agreement includes provisions for mutual releases, indemnification of ACE and claims handling procedures.

The Company anticipates that one or more additional agreements with other excess insurers, such as coverage-in-place agreements, may be executed in 2007, and the Company believes that the payment terms of such agreements will be consistent with the overall estimated future reimbursement rate of 40%, although the actual reimbursement rate will vary from period to period due to policy terms and certain gaps in coverage as described below.

Effects on the Consolidated Financial Statements

The Company has retained the firm of Hamilton, Rabinovitz & Alschuler, Inc. (“HR&A”), a nationally recognized expert in the field, to assist management in estimating the Company’s asbestos liability in the tort system. HR&A reviewed information provided by the Company concerning claims filed, settled and dismissed, amounts paid in settlements and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant, the jurisdiction where filed and the time lag from filing to disposition of the claim. The methodology used by HR&A to project future asbestos costs was based largely on the Company’s experience during 2005 and 2006 for claims filed, settled and dismissed. The Company’s experience was compared to the results of previously conducted epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population of workers believed to have been exposed to asbestos. Using that information, HR&A estimated the number of future claims that would be filed, as well as the related settlement or indemnity costs that would be incurred to resolve those claims. This methodology has been accepted by numerous courts and is the same methodology that is utilized by the expert who is routinely retained by the asbestos claimants committee in asbestos-related bankruptcies. After discussions with the Company, HR&A assumed that costs of defending asbestos claims in the tort system would increase to $45 million in 2007 and remain at that level (with increases of 4.5% per year for inflation) indexed to the number of estimated pending claims in future years. Based on this information, HR&A compiled an estimate of the Company’s asbestos liability for pending and future claims, based on claim experience over the past two years and covering claims expected to be filed through the year 2011. Although the methodology used by HR&A will also show claims and costs for periods subsequent to 2011 (up to and including the endpoint of the asbestos studies referred to above), management believes that the level of uncertainty is too great to provide for reasonable estimation of the number of future claims, the nature of such claims or the cost to resolve them for years beyond 2011, particularly given the possibility of federal legislation within that time frame.

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In the Company’s view, the forecast period used to provide the best estimate for asbestos claims and related liabilities and costs is a judgment based upon a number of trend factors, including the number and type of claims being filed each year, the jurisdictions where such claims are filed and the effect of any legislation or judicial orders in such jurisdictions restricting the types of claims that can proceed to trial on the merits and the likelihood of any comprehensive asbestos legislation at the federal level. In addition, the dynamics of asbestos litigation in the tort system have been significantly affected over the past five to ten years by the substantial number of companies that filed for bankruptcy protection, thereby staying any asbestos claims against them until the conclusion of such proceedings, and the establishment of a number of post-bankruptcy trusts for asbestos claimants, which are estimated to hold $25 billion for payments to current and future claimants. These trend factors have both positive and negative effects on the dynamics of asbestos litigation in the tort system and the related best estimate of the Company’s asbestos liability, and these effects do not move in a linear fashion but rather change over multi-year periods. Accordingly, the Company’s management monitors these trend factors over time and periodically assesses whether an alternative forecast period is appropriate. While it is reasonably possible that the Company will incur additional charges for asbestos liabilities and defense costs in excess of the amounts currently provided, the Company does not believe that any such amount can be reasonably estimated beyond 2011. Accordingly, no accrual has been recorded for any costs which may be incurred for claims made subsequent to 2011.

Management has made its best estimate of the costs through 2011 based on the analysis by HR&A completed in January 2007. A liability of $529.6 million has been recorded to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2011, of which approximately 43% is attributable to settlement and defense costs for future claims projected to be filed through 2011. The liability is reduced when cash payments are made in respect of settled claims and defense costs. It is not possible to forecast when cash payments related to the asbestos liability will be fully expended; however, it is expected such cash payments will continue for many years, due to the significant proportion of future claims included in the estimated asbestos liability. An asset of $222.9 million has been recorded representing the probable insurance reimbursement for such claims using a rate of 40% for future recoveries.

Historically, a significant portion of the Company’s settlement and defense costs have been paid by its primary insurers. Following the exhaustion of most of that primary coverage, and in accordance with the settlement agreements discussed above, certain of the Company’s excess insurers have begun reimbursing the Company for a significant portion of its settlement and defense costs. The Company has substantial excess coverage policies in addition to those bound by the settlement agreements described above that are also expected to respond to asbestos claims as settlements and other payments exhaust the underlying policies. The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance payments, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. In addition, the timing and amount of reimbursements will vary because the Company’s insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage. In addition to consulting with legal counsel on these insurance matters, the Company retained insurance consultants to assist management in the estimation of probable insurance recoveries based upon the aggregate liability estimate described above and assuming the continued viability of all solvent insurance carriers. After considering the foregoing factors and consulting with legal counsel and such insurance consultants, the Company determined its probable insurance reimbursement rate to be 40%.

Estimation of the Company’s ultimate exposure for asbestos-related claims is subject to significant uncertainties, as there are multiple variables that can affect the timing, severity and quantity of claims. The Company cautions that its estimated liability is based on assumptions with respect to future claims, settlement and defense costs based on recent experience during the last few years that may not prove reliable as predictors. A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed and the quality of the product identification, or a significant upward or downward trend in the costs of defending claims, could change the estimated liability, as would any substantial adverse verdict at trial. A legislative solution or a revised structured settlement transaction could also change the estimated liability.

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Since many uncertainties exist surrounding asbestos litigation, the Company will continue to evaluate its estimated asbestos-related liability and corresponding estimated insurance reimbursement as well as the underlying assumptions and process used to derive these amounts. These uncertainties may result in the Company incurring future charges or increases to income to adjust the carrying value of recorded liabilities and assets, particularly if the number of claims and settlement and defense costs change significantly or if legislation or another alternative solution is implemented; however, the Company is currently unable to estimate such future changes. Although the resolution of these claims may take many years, the effect on results of operations and financial position in any given period from a revision to these estimates could be material.

Certain Legal Proceedings

On January 21, 2005, five of the Company’s insurers within two corporate insurer groups filed suit in Connecticut state court seeking injunctive relief against the Company and declaratory relief against the Company and dozens of the Company’s other insurers. The suit also sought temporary and permanent injunctive relief restraining the Company from participating in any further settlement discussions with representatives of asbestos plaintiffs or agreeing to any settlement unless the Company permitted the plaintiff insurers to both participate in such discussions and have a meaningful opportunity to consider whether to consent to any proposed settlement, or unless the Company elected to waive coverage under the insurers’ policies. The plaintiffs also sought expedited discovery on, among other things, the Company’s proposed global settlement. At a hearing on February 22, 2005, the Company (i) contested the application for temporary injunctive relief and expedited discovery; (ii) moved to dismiss the count of the Complaint seeking injunctive relief on the grounds that the count was moot insofar as it addressed the proposed global settlement terminated on January 24, 2005 and not appropriate for determination insofar as it sought relief regarding any future negotiations with representatives of asbestos claimants; and (iii) moved to dismiss counts of the Complaint seeking declaratory relief with respect to the proposed global settlement as moot. At the hearing, the Court denied the plaintiff insurers’ application for temporary injunctive relief and expedited discovery. In denying temporary injunctive relief, the Court stated that the plaintiffs could not show irreparable injury and that the plaintiff insurers would have an adequate remedy at law. In light of the Court’s ruling and the Company’s motions to dismiss, the insurer plaintiffs sought and received leave to amend their Complaint to remove certain declaratory relief counts and to remove or restate the remaining allegations.

On April 8, 2005, the insurer plaintiffs filed an Amended Complaint raising five counts against the Company. The Amended Complaint seeks: (i) declaratory relief regarding the Company’s rights to coverage, if any, under the policies; (ii) declaratory relief regarding the Company’s alleged breaches of the policies in connection with an alleged increase in asbestos claim counts; (iii) a declaration of no coverage in connection with allegedly time-barred claims; (iv) declaratory relief against the Company and the other insurer defendants for allocation of damages that may be covered under the insurance policies; and (v) preliminary and permanent injunctive relief. On April 18, 2005, the Company moved to dismiss the claims for injunctive relief on the grounds that the Court had no jurisdiction to consider the claims because they were speculative and unripe. On October 19, 2005, the Court denied the Company’s motion to dismiss, ruling that the injunctive claims were not unripe. Nonetheless, the Court noted that the Company later could seek summary judgment in connection with the injunctive claims if discovery shows them to be without factual basis. Everest Reinsurance Company and Mt. McKinley Insurance Company (collectively, “Everest”) are two of the plaintiffs in the Connecticut state court action. As referenced above, effective April 10, 2006, the Company and Everest reached a settlement agreement pursuant to which, among other things, Everest’s insurance coverage obligations for asbestos claims under the three historical Everest policies issued to Crane Co. were released in exchange for a $3.8 million cash payment, which was received by the Company on April 21, 2006. As also referenced above, effective December 22, 2006, the Company and two of the other plaintiffs in the action, Century Indemnity Company and ACE Property and Casualty Company (collectively “ACE”), reached an agreement pursuant to which, among other things, they established a coverage-in-place arrangement for asbestos claims under the Company’s excess policies with ACE. The Company continues to believe it has meritorious defenses to all the counts of the Amended Complaint and cross-claims filed among the other parties, and intends to defend this matter vigorously.

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Section 9 – FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01. Financial Statements and Exhibits.

(a) None

(b) None

(c) None

(d) Exhibits

99.1 Earnings Press Release dated January 29, 2007, issued by Crane Co.

99.2 Crane Co. Quarterly Financial Data Supplement for the quarter ended December 31, 2006

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CRANE CO.
Dated: January 29, 2007	By:	/s/ J. Robert Vipond
		J. Robert Vipond Vice President, Finance and Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Earnings Press Release dated January 29, 2007, issued by Crane Co.
99.2	Crane Co. Quarterly Financial Data Supplement for the quarter ended December 31, 2006

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EX-99.1

Exhibit 99.1

Crane Co. NEWS

Contact:

Richard E. Koch

Director, Investor Relations and Corporate Communications

203-363-7352

www.craneco.com

CRANE CO. REPORTS RECORD 2006 RESULTS;

EPS INCREASED 19% TO $2.67 FROM $2.25;

FOURTH QUARTER EPS INCREASED 5% TO $.61 FROM $.58

Fourth Quarter Highlights (vs. 2005):

• Earnings per share increased 5% to $.61 per share

• Sales increased 15% to $582 million

• Operating profit decreased 3% to $53 million

• Operating profit margin was 9.2%, down from 10.9%

Twelve Months Highlights (vs. Twelve Months of 2005)

• Earnings per share increased 19% to $2.67 per share

• Sales increased 9% to $2.3 billion

• Operating profit increased 16% to $248 million

• Operating profit margin was 11.0%, up from 10.4%

STAMFORD, CONNECTICUT – January 29, 2007 - Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reports fourth quarter 2006 net income was $38.0 million, or $.61 per share, compared with net income of $35.3 million, or $.58 per share, in the fourth quarter of 2005.

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Fourth quarter 2006 sales increased $75.3 million, or 15%, including core business growth of $19.1 million (4%), sales from acquired businesses (Cash Code, Dixie-Narco, Automatic Products, Telequip and Noble Composites) of $52.4 million (10%) and favorable foreign currency translation of $12.5 million (3%), reduced by lower sales from divested businesses (Resistoflex Aerospace and Westad) of $8.7 million (2%). Earnings per share was $.61 versus $.58 in the fourth quarter of 2005, as operating profit of $53 million versus $55 million in 2005 was more than offset by a reduced tax rate of 26.7% versus 31% in 2005. The reduced tax rate in the fourth quarter of 2006 reflected the passage of the federal research and development tax credit in the fourth quarter of 2006.

Order backlog at December 31, 2006 totaled $677 million, compared with backlog of $639 million at September 30, 2006 and $597 million at December 31, 2005.

“I am pleased with our 2006 record EPS, the strong performance of the Fluid Handling business, and the 20% increase in the annual dividend rate,” said Crane Co. president and chief executive officer, Eric C. Fast. “Fourth quarter 2006 results were negatively impacted by the integration of two unprofitable vending manufacturers which are important strategic additions to strengthen our industry leading positions. Our five acquisitions in 2006, and strong increases in the backlog in our late-cycle Aerospace and Fluid Handling businesses, position us to post our third consecutive year of record earnings in 2007.”

Cash Flow and Financial Position

Cash provided by operating activities was $78.8 million in the fourth quarter of 2006 compared with $77.4 million last year. Full year cash provided by operating activities was $181.7 million

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compared to $181.5 million in the prior year, and was lower than guidance of $200-$215 million primarily because of higher working capital needs. Net debt to total capitalization increased to 22.2% at December 31, 2006, compared with 13.1% at December 31, 2005, driven primarily by the $283 million expended in 2006 for the acquisitions of CashCode, Dixie-Narco, Automatic Products, Telequip Corporation, and Noble Composites. On November 20, 2006, the Company completed a 30-year, $200 million Notes offering, which will bear interest at a coupon rate of 6.55% per year. The net proceeds of the offering were used to repay indebtedness outstanding. In the fourth quarter of 2006, the Company also repurchased 605,000 shares of its common stock on the open market at a cost of $22.5 million. During 2006, the Company repurchased 1,553,000 shares on the open market at a cost of $60 million. (Please also see the attached Condensed Statement of Cash Flows and Non-GAAP Financial Measures.)

Segment Results

All comparisons below refer to the fourth quarter 2006 versus the fourth quarter 2005, unless otherwise specified.

Aerospace & Electronics

(dollars in millions)	Fourth Quarter						Change
	2006			2005
Sales	$	145.9		$	140.5		$	5.4	4	%
Operating Profit	$	25.8		$	25.2		$	0.6	2	%
Profit Margin		17.7	%		18.0	%

The fourth quarter 2006 sales increase of $5.4 million reflected a sales increase of $10.4 million in the Aerospace Group and a decrease of $5.0 million in the Electronics Group. Segment operating profit increased slightly over last year, as an increase of $3.9 million in Aerospace was partially offset by a $3.3 million decline in Electronics.

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Aerospace Group sales of $98.3 million increased $10.4 million, or 12%, from $87.9 million in the prior year period. Resistoflex Aerospace, which was sold in May 2006, had sales of $4.6 million in the fourth quarter of 2005. Excluding Resistoflex Aerospace, sales increased $15.0 million or 18% over the fourth quarter of 2005. The $3.9 million increase in operating profit benefited from strong aftermarket sales growth. Backlog at the end of the fourth quarter of 2006 (excluding Resistoflex) increased 21% over the fourth quarter of 2005, positioning the Group for solid growth in 2007.

Electronics Group sales of $47.6 million decreased $5.0 million, or 10%, due to lower orders in microwave and electronic manufacturing services solutions. Operating profit decreased by $3.3 million from the fourth quarter of 2005 primarily reflecting the lower volumes and difficult comparisons to a strong 2005 fourth quarter. Strong orders in the custom power business in the fourth quarter resulted in Electronics backlog at year end being slightly higher than the prior year.

The Aerospace & Electronics segment backlog was $397 million at December 31, 2006 compared with $373 million at September 30, 2006 and $362 million at December 31, 2005.

Engineered Materials

(dollars in millions)	Fourth Quarter						Change
	2006			2005
Sales	$	69.3		$	69.3			—		—
Operating Profit	$	11.7		$	12.1		$	(0.4	)	(3	)%
Profit Margin		16.9	%		17.5	%

The fourth quarter 2006 sales were equal to the prior year period as sales of $9.2 million from Noble Composites, acquired in September 2006, were offset by lower volume primarily to

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recreational vehicle manufacturers. Operating profit in 2006 was slightly reduced as the benefit of the Noble acquisition was offset by reduced operating profit in the existing business from lower sales and continued product support costs in the recreational vehicle market.

Merchandising Systems

(dollars in millions)	Fourth Quarter						Change
	2006			2005
Sales	$	78.3		$	36.2		$	42.1		116	%
Operating Profit	$	0.4		$	1.4		$	(1.0	)	(71	)%
Profit Margin		0.5	%		4.0	%

Merchandising Systems sales increased $42.1 million, or 116%, reflecting increased Payment Solutions sales of $21.6 million from the CashCode and Telequip acquisitions and a $20.5 million increase in Vending Solutions sales from the acquisitions of Dixie-Narco and Automatic Products. Vending sales, excluding the acquired businesses, were down 7% reflecting weak demand. The results in the quarter were caused by losses in Vending Solutions of $5 million offset by the profits from the Payment Solutions acquisitions and at NRI. Losses in Vending Solutions were caused by reduced volumes, one-time costs associated with ramping up production following the relocation of Automatic Products manufacturing to our existing St. Louis facility, and the acquisition of Dixie-Narco.

On October 23, 2006, the Company announced that it had acquired Dixie-Narco, a manufacturer of can and bottle vending machines, for a purchase price of $46 million in cash. Dixie-Narco, which had 2006 sales of approximately $155 million, manufactures can and bottle vending machines primarily for well-known firms such as The Coca-Cola Company; PepsiCo, Inc.; and Dr. Pepper/Seven Up, Inc. This business had been unprofitable prior to the acquisition and significant changes to Dixie-Narco’s past business practices are underway to return it to profitability. While these changes will take a number of months to implement, management is confident about the longer term attractiveness of this acquisition.

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Fluid Handling

(dollars in millions)	Fourth Quarter						Change
	2006			2005
Sales	$	255.4		$	230.9		$	24.5	11	%
Operating Profit	$	22.8		$	22.3		$	0.5	2	%
Profit Margin		8.9	%		9.6	%

The fourth quarter sales increased $24.5 million, or 11%, including $18.7 million (8%) of core sales, favorable foreign currency translation of $9.9 million (5%), partially offset by lower sales from the divestiture of Westad of $4.1 million (2%). Backlog at the end of the fourth quarter of 2006 (excluding Westad) increased 29% over the fourth quarter of 2005. Operating profit increased $0.5 million, or 2%, with improved Valve Group profits being largely offset by lower profits in Pumps & Systems.

Valve Group sales were $188.3 million in the fourth quarter of 2006 compared with $162.4 million in the fourth quarter of 2005, an increase of 16%. Valve Group core sales growth was $21.5 million (13%), favorable currency translation was $8.5 million (5%), partially offset by $4.1 million (2%) of sales of Westad. Core sales improved from increased demand for industrial valves, particularly from the chemical process and refining industries, and generally higher demand from many commercial applications. Operating profit increased 24%, from $14.7 million to $18.2 million, versus the prior year, reflecting higher sales and improved operating costs. Profit margin of 9.7% increased from 9.1% in the prior year.

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Crane Pumps & Systems sales of $24.4 million decreased $3.1 million, or 11%, reflecting generally softer demand in residential building and municipal projects and the absence of approximately $1 million of pump sales to FEMA that occurred in 2005 related to Hurricane Katrina recovery efforts. Profit margin of 2.3% was down from 12.6% in the prior year primarily as a result of lower sales and costs associated with supply chain disruptions.

Crane Supply sales of $42.7 million increased $1.7 million, or 4%, primarily from favorable foreign currency translation. Profit margin was 9.5% in 2006, slightly below 9.9% in 2005.

The Fluid Handling segment backlog was $211 million at December 31, 2006, compared with $204 million at September 30, 2006 and $187 million at December 31, 2005 ($164 million excluding Westad).

Controls

(dollars in millions)	Fourth Quarter						Change
	2006			2005
Sales	$	32.9		$	29.5		$	3.4	12	%
Operating Profit	$	2.7		$	2.5		$	0.2	8	%
Profit Margin		8.2	%		8.5	%

Beginning with the fourth quarter of 2006, the Company has included the Wireless Monitoring Systems and Crane Environmental businesses in the Controls Segment, which were previously included in the Aerospace & Electronics and the Fluid Handling Segments, respectively. Results for the past three years adjusted for these changes are attached to this earnings release.

7

Sales improvements of $3.4 million, or 12%, were largely attributable to increased demand for products in the transportation, oil and gas exploration, gas transmission, and water treatment markets.

First Quarter and Full Year 2007 Guidance

Management expects earnings in the first quarter 2007 to be in the range of $.62 to $.68 per share, compared to $.61 per share in the first quarter 2006. On a full year basis, management is maintaining its 2007 earnings per share guidance of $2.80 to $2.95. The midpoint of the Company’s current 2007 EPS guidance represents an 8% increase above its EPS for 2006.

Management continues to expect free cash flow (cash flow from operations less capital expenditures) in 2007 will be in the range of $175-190 million. Please see the Non-GAAP Financial Measures table attached to this press release for details. Additional information with respect to the Company’s asbestos liability and related accounting provisions and cash requirements is set forth in the Current Report on Form 8-K filed with a copy of this press release.

Conference Call

Crane Co. has scheduled a conference call to discuss the fourth quarter’s financial results on Tuesday, January 30th, 2007 at 10:00 A.M. (Eastern). All interested parties may listen to a live webcast of the call at http://www.craneco.com. An archived webcast will also be available to replay this conference call directly from the Company’s website.

Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane provides products and solutions to customers in the aerospace, electronics,

8

hydrocarbon processing, petrochemical, chemical, power generation, automated merchandising, transportation and other markets. The Company has five business segments: Aerospace & Electronics, Engineered Materials, Merchandising Systems, Fluid Handling, and Controls. Crane has approximately 12,000 employees in North America, South America, Europe, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements present management’s expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and subsequent reports filed with the Securities and Exchange Commission.

(Financial Tables Follow)

2007 – 2

9

EX-99.2

Exhibit 99.2

CRANE CO.

Income Statement Data

(in thousands, except per share data)

	Three Months Ended December 31,						Year Ended December 31,
	2006			2005			2006			2005
Net Sales:*
Aerospace & Electronics	$	145,892		$	140,488		$	566,372		$	536,829
Engineered Materials		69,328			69,274			309,258			304,824
Merchandising Systems		78,253			36,248			257,818			166,298
Fluid Handling		255,411			230,924			999,867			937,097
Controls		32,877			29,525			124,028			116,810
Intersegment Elimination		(109	)		(121	)		(454	)		(609	)
Total Net Sales	$	581,652		$	506,338		$	2,256,889		$	2,061,249
Operating Profit:*
Aerospace & Electronics	$	25,767		$	25,224		$	99,181		$	84,982
Engineered Materials		11,700			12,147			50,252			62,982
Merchandising Systems		428			1,434			17,529			12,797
Fluid Handling		22,780			22,266			107,377			76,240
Controls		2,699			2,498			10,052			8,320
Corporate		(9,909	)		(8,454	)		(36,455	)		(31,699	)
Total Operating Profit		53,465			55,115			247,936			213,622
Interest Income		2,776			1,368			4,939			2,372
Interest Expense		(6,748	)		(5,391	)		(23,015	)		(22,416	)
Miscellaneous- Net		2,333			101			9,474			2,945
Income Before Income Taxes		51,826			51,193			239,334			196,523
Provision for Income Taxes		13,844			15,870			73,447			60,486
Net Income	$	37,982		$	35,323		$	165,887		$	136,037
Share Data:
Net Income per Diluted Share	$	0.61		$	0.58		$	2.67		$	2.25
Average Diluted Shares Outstanding		61,880			60,928			62,103			60,413
Average Basic Shares Outstanding		60,839			60,233			60,906			59,816
Supplemental Data:
Cost of Sales	$	399,657		$	347,630		$	1,525,633		$	1,418,662
Selling, General & Administrative		128,530			103,593			483,320			428,965
Depreciation and Amortization **		15,229			11,502			54,285			48,011
Stock Compensation Expense		3,595			1,252			14,883			7,704

* Segment amounts reflect changes for 2005 and 2006 with Wireless Monitoring Systems and Crane Environmental business units included in the Controls Segment which were previously included in the Aerospace & Electronics and the Fluid Handling Segments, respectively. See separate Net Sales and Operating Profit worksheets for quarterly results from 2003 to 2006 reflecting the move of these business units to the Control Segment.

** Amount included within cost of sales and selling, general & administrative costs.

CRANE CO.

Condensed Balance Sheets

(in thousands)

	December 31, 2006		December 31, 2005
ASSETS
Current Assets
Cash and Cash Equivalents	$	138,607	$	180,392
Accounts Receivable		330,146		279,521
Inventories		313,259		272,354
Current Insurance Receivable - Asbestos		52,500		10,000
Other Current Assets		45,897		56,128
Total Current Assets		880,409		798,395
Property, Plant and Equipment		289,555		263,791
Long-Term Insurance Receivable - Asbestos		170,400		224,600
Other Assets		385,384		284,345
Goodwill		704,736		568,355
Total Assets	$	2,430,484	$	2,139,486
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	9,505	$	254
Accounts Payable		161,270		149,647
Current Asbestos Liability		70,000		55,000
Accrued Liabilities		196,723		174,366
Income Taxes		24,428		19,322
Total Current Liabilities		461,926		398,589
Long-Term Debt		391,760		293,248
Deferred Tax Liability		89,595		71,406
Long-Term Asbestos Liability		459,567		526,830
Other Liabilities		109,033		96,119
Shareholders’ Equity		918,603		753,294
Total Liabilities and Shareholders’ Equity	$	2,430,484	$	2,139,486

CRANE CO.

Condensed Statements of Cash Flows

(in thousands)

	Three Months Ended December 31,						Year Ended December 31,
	2006			2005			2006			2005
Operating Activities:
Net income	$	37,982		$	35,323		$	165,887		$	136,037
Income from joint venture		(1,116	)		(1,489	)		(5,641	)		(5,965	)
Loss (Gain) on divestitures		453			—			(8,478	)		—
Depreciation and amortization		15,229			11,502			54,285			48,011
Stock-based compensation expense		3,595			1,252			14,883			7,704
Cash (used for) provided by operating working capital		34,782			40,095			(835	)		5,032
Other		(1,540	)		11,474			2,157			26,139
Subtotal		89,385			98,157			222,258			216,958
Asbestos related payments, net of insurance recoveries		(10,606	)		(20,782	)		(40,563	)		(45,338	)
Refund associated with terminated Master Settlement Agreement		—			—			—			9,925
Total provided by operating activities		78,779			77,375			181,695			181,545
Investing Activities:
Capital expenditures		(4,859	)		(9,530	)		(27,171	)		(27,164	)
Proceeds from disposition of capital assets		1,786			4,770			5,103			6,339
Proceeds from divestitures		—			—			26,088			—
Payments for acquisitions, net of cash acquired		(47,903	)		(1,666	)		(282,637	)		(8,823	)
Total used for investing activities		(50,976	)		(6,426	)		(278,617	)		(29,648	)
Financing Activities:
Dividends paid		(9,131	)		(7,533	)		(33,596	)		(26,962	)
Common shares acquired on the open market		(22,499	)		—			(59,998	)		—
Stock options exercised - net of shares reacquired		2,264			7,990			22,870			18,624
Excess tax benefit from stock-based compensation		113			—			7,688			—
Issuance of debt		245,228			—			316,928			—
Repayment of debt, net		(210,968	)		(1,427	)		(211,323	)		(4,843	)
Total provided by (used for) financing activities		5,007			(970	)		42,569			(13,181	)
Effect of exchange rate on cash and cash equivalents		6,720			(3,191	)		12,568			(9,051	)
Increase (decrease) in cash and cash equivalents		39,530			66,788			(41,785	)		129,665
Cash and cash equivalents at beginning of period		99,077			113,604			180,392			50,727
Cash and cash equivalents at end of period	$	138,607		$	180,392		$	138,607		$	180,392

CRANE CO.

Order Backlog

(in thousands)

	December 31, 2006		September 30, 2006		June 30, 2006		March 31, 2006		December 31, 2005
Aerospace & Electronics	$	396,799	$	372,601	$	370,267	$	363,443	$	361,920
Engineered Materials		13,198		13,162		18,617		16,972		17,241
Merchandising Systems		33,170		18,637		15,190		14,838		9,183
Fluid Handling		210,532		204,157		198,651		202,739		186,727
Controls		22,982		30,396		34,161		23,578		22,059
Total Backlog	$	676,681	$	638,953	$	636,886	$	621,570	$	597,130

CRANE CO.

Non-GAAP Financial Measures

(in thousands)

	December 31, 2006			December 31, 2005
BALANCE SHEET ITEMS
Notes Payable and Current Maturities of Long-Term Debt	$	9,505		$	254
Long-Term Debt		391,760			293,248
Total Debt		401,265			293,502
Less Cash and Cash Equivalents		(138,607	)		(180,392	)
Net Debt		262,658			113,110
Shareholders’ Equity		918,603			753,294
Total Capitalization	$	1,181,261		$	866,404
Percentage of Net Debt to Total Capitalization		22.2	%		13.1	%

	Three Months Ended December 31,						Year Ended December 31,
	2006			2005			2007	2006			2005
							(Estimated)
CASH FLOW ITEMS
Cash Provided from Operating Activities before Asbestos - Related Payments	$	89,385		$	98,157		$240,000 - 255,000	$	222,258		$	216,958
Asbestos Related Payments, Net of Insurance Recoveries *		(10,606	)		(20,782	)	(51,500)		(40,563	)		(46,838	)
Equitas Receipts							31,500					1,500
Refund Associated with Terminated Master Settlement Agreement		—			—		—		—			9,925
Cash Provided from Operating Activities		78,779			77,375		$220,000 - 235,000		181,695			181,545
Less: Capital Expenditures		(4,859	)		(9,530	)	(45,000)		(27,171	)		(27,164	)
Free Cash Flow	$	73,920		$	67,845		$175,000 - 190,000	$	154,524		$	154,381

* Includes certain legal fees and expenses relating to the terminated Master Settlement Agreement amounting to $5.1 million for the full year of 2005 and $.3 million in the fourth quarter of 2005.

Certain non-GAAP measures have been provided to facilitate comparison with the prior year.

Free cash flow provides supplemental information to assist management and investors in analyzing the Company’s ability to generate positive cash flow. Free cash flow is considered a measure of cash generation and should be considered in addition to, but not as a substitute for, other measures reported in accordance with generally accepted accounting principles and may be inconsistent with similar measures presented by other companies.

CRANE CO.

Net Sales - Realigned Segments *

(in thousands)

	Three Months Ended,												Year
	March 31			June 30			September 30			December 31
2006
Aerospace & Electronics	$	139,540		$	141,453		$	139,487		$	145,892		$	566,372
Engineered Materials		85,949			82,345			71,636			69,328			309,258
Merchandising Systems		52,556			53,625			73,384			78,253			257,818
Fluid Handling		242,179			249,995			252,282			255,411			999,867
Controls		29,329			30,904			30,918			32,877			124,028
Intersegment Elimination		(171	)		(171	)		(3	)		(109	)		(454	)
Total	$	549,382		$	558,151		$	567,704		$	581,652		$	2,256,889
2005
Aerospace & Electronics	$	129,322		$	129,731		$	137,288		$	140,488		$	536,829
Engineered Materials		80,798			79,194			75,558			69,274			304,824
Merchandising Systems		43,753			45,687			40,610			36,248			166,298
Fluid Handling		224,883			241,864			239,426			230,924			937,097
Controls		28,488			29,297			29,500			29,525			116,810
Intersegment Elimination		(183	)		(154	)		(151	)		(121	)		(609	)
Total	$	507,061		$	525,619		$	522,231		$	506,338		$	2,061,249
2004
Aerospace & Electronics	$	116,786		$	123,511		$	122,930		$	133,932		$	497,159
Engineered Materials		69,010			74,321			69,913			62,942			276,186
Merchandising Systems		39,450			42,591			44,078			43,086			169,205
Fluid Handling		199,978			214,217			212,647			218,966			845,808
Controls		23,214			24,596			28,074			26,940			102,824
Intersegment Elimination		(133	)		(130	)		(320	)		(264	)		(847	)
Total	$	448,305		$	479,106		$	477,322		$	485,602		$	1,890,335
2003
Aerospace & Electronics	$	87,374		$	102,807		$	108,654		$	122,184		$	421,019
Engineered Materials		62,886			58,278			64,317			54,739			240,220
Merchandising Systems		37,606			39,869			40,396			37,418			155,289
Fluid Handling		169,687			184,297			190,484			188,729			733,197
Controls		19,069			20,834			21,543			25,299			86,745
Intersegment Elimination		(152	)		(112	)		(103	)		(112	)		(479	)
Total	$	376,470		$	405,973		$	425,291		$	428,257		$	1,635,991

* Segment amounts reflect changes for 2003 - 2006 with Wireless Monitoring Systems and Crane Environmental business units included in the Controls Segment which were previously included in the Aerospace & Electronics and the Fluid Handling Segments, respectively.

CRANE CO.

Operating Profit - Realigned Segments *

(in thousands)

	Three Months Ended,												Year
	March 31			June 30			September 30			December 31
2006
Aerospace & Electronics	$	22,406		$	25,967		$	25,041		$	25,767		$	99,181
Engineered Materials		15,740			13,151			9,661			11,700			50,252
Merchandising Systems		3,752			4,462			8,887			428			17,529
Fluid Handling		25,478			29,931			29,188			22,780			107,377
Controls		1,540			3,254			2,559			2,699			10,052
Corporate		(11,698	)		(10,675	)		(4,173	)		(9,909	)		(36,455	)
Total	$	57,218		$	66,090		$	71,163		$	53,465		$	247,936
2005
Aerospace & Electronics	$	15,490		$	18,197		$	26,071		$	25,224		$	84,982
Engineered Materials		16,858			18,286			15,691			12,147			62,982
Merchandising Systems		3,782			4,052			3,529			1,434			12,797
Fluid Handling		12,867			20,174			20,933			22,266			76,240
Controls		1,776			1,747			2,299			2,498			8,320
Corporate		(8,923	)		(7,558	)		(6,764	)		(8,454	)		(31,699	)
Total	$	41,850		$	54,898		$	61,759		$	55,115		$	213,622
2004
Aerospace & Electronics	$	19,973		$	23,653		$	23,059		$	24,524		$	91,209
Engineered Materials		15,531			15,782			13,283			9,476			54,072
Merchandising Systems		474			3,121			4,170			1,957			9,722
Fluid Handling		8,959			15,363			15,649			13,149			53,120
Controls		906			1,071			2,398			1,627			6,002
Corporate		(7,165	)		(8,235	)		(7,928	)		(4,493	)		(27,821	)
Asbestos Charge								(321,813	)		14,019			(307,794	)
Environmental Charge								(40,000	)					(40,000	)
Total	$	38,678		$	50,755		$	(311,182	)	$	60,259		$	(161,490	)
2003
Aerospace & Electronics	$	16,871		$	23,226		$	22,522		$	32,859		$	95,478
Engineered Materials		12,964			11,674			13,295			10,203			48,136
Merchandising Systems		(2,118	)		1,322			2,064			1,498			2,766
Fluid Handling		8,231			14,389			11,850			10,924			45,394
Controls		(400	)		346			863			2,521			3,330
Corporate		(7,369	)		(8,046	)		(5,825	)		(4,852	)		(26,092	)
Total	$	28,179		$	42,911		$	44,769		$	53,153		$	169,012

* Segment amounts reflect changes for 2003 - 2006 with Wireless Monitoring Systems and Crane Environmental business units included in the Controls Segment which were previously included in the Aerospace & Electronics and the Fluid Handling Segments, respectively.